Chicago struggles to auction off taxi medallions

It's an auction without end: Amid the rise of ride-booking services such as Uber, the city's cab regulator has been unable to close out a sale of taxi medallions more than two years after first taking bids on them.

In September 2013, the Department of Business Affairs and Consumer Protection announced it would auction off 50 cab medallions that had returned to the city after foreclosures and other problems.

Back then, the city insisted on minimum bids of $360,000 per medallion, creating the possibility of a windfall worth at least $18 million for the cash-strapped city.

But the city's Office of Inspector General noted in a report issued yesterday that the agency “has yet to take final action on medallion sales from the 2013 auction even though the bidding closed over (two) years ago.”

The failure to finish up the auction is another example of how ride-booking firms have upset assumptions about taxi medallions, which permit drivers to operate a licensed cab in the city. As consumers have shifted to Uber and Lyft, pricing for medallions has fallen and lenders that previously made loans into the market have fled it.

Charles Goodbar, a Chicago attorney and medallion owner, said that his understanding was that a single bidder had agreed to buy 20 medallions out of the 50 the city put up for auction in 2013, but “the bidder has been unable to obtain financing.” He didn't immediately know the identity of the bidder.

If others are circling the city's medallions, meanwhile, they'll almost certainly have to buy them in cash or turn to nontraditional lenders to get loans for the purchases.

Eric Howell, an executive vice president for New York-based Signature Bank, for example, reiterated that the lender had not “been making new loans” into taxi markets “for a while now” at a November 17 investor conference, according to a transcript from Bloomberg. The bank previously had made loans for medallion owners in New York and Chicago.

The company already has restructured $110 million in Chicago medallion loans, he added at the event earlier this month, and was working on restructuring another $10 million to $20 million.

Mika Stambaugh, a spokeswoman for the Department of Business Affairs and Consumer Protection, didn't immediately have a comment.

Inspector General Joseph Ferguson's office got interested in the 2013 auction because it wanted to verify that the auction was arranged in accordance with city code, according to the report yesterday. The report said the department “designed and implemented an auction process that should result in maximum revenue” but was unable to fully verify that because the auction never was finalized.